Emerging-Sovereign-Debt-Markets-News Week 28 September 4 October 2019

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Emerging Sovereign Debt Markets NEWS
Number 40 Week 28 September – 4 October 2019
Table of contents
ASIA ...................................................................2 Sri Lanka's interim budget aims for 2.2%

deficit in Jan-April .................................... 9
China .............................................................2
Thailand ........................................................ 9
S&P Global affirms China's 'A+/A-1'
ratings, stable outlook ..............................2 Fitch Ratings: Thailand's Economy, Banks
Resilient to Rising Global Risks................. 9
India ..............................................................3
Thailand plans to sell up to $4.7 bln of
Govt sticks to FY20 Budget target; plans
govt bonds in Oct-Dec ............................ 10
for overseas sovereign bonds not firmed
up .............................................................3 United Arab Emirates................................... 10
India Plans to Raise FPI Cap in Dubai ready to take on more debt if
Government Bonds as Per Comfort ...........3 needed.................................................... 10
Bond yields fall as government keeps EUROPE ............................................................ 10
borrowing plan unchanged .......................4
Albania ........................................................ 10
India’s 5th Series of Sovereign Gold Albania to sell 2 bln leks (16.2 mln euro)
Bonds to Open for Subscription on Oct 7 ..4 of 10-yr T-notes on Oct 7 ........................ 10
Indonesia ......................................................5 Belarus ........................................................ 11
Indonesia raises 7.12 trln rupiah from Belarusian foreign debt fell 1.9% to $16.9
Islamic bonds auction ...............................5 bln in 8M ................................................. 11
Indonesia to top up bond issuance by $1 Bosnia ......................................................... 11
bln amid widening fiscal deficit ................5
Bosnia cabinet approves interim financing
Iraq ...............................................................5 for 4th quarter due to lack of budget ...... 11
Moody's Says Government of Iraq's Czech Republic ............................................ 12
Dependence on Oil Revenues to Persist As
Reform Momentum Remains Slow ............5 Foreign holdings of Czech domestic bonds
rise in August ......................................... 12
Iraq dollar bonds tumble 1.2 cents amid
unrest, surging death toll .........................5 Moody's Upgrades Czech Republic's
Ratings to AA3, Changes Outlook to
Lebanon .........................................................6 Stable from Positive ............................... 12
Moody's puts Lebanon's Caa1 rating under Estonia ........................................................ 12
review for downgrade...............................6
Fitch Affirms Estonia at 'AA-'; Outlook
As Lebanon reforms go slowly, protests Stable ..................................................... 12
suggest widening anger............................6
North Macedonia ......................................... 12
Lebanon central bank ready to repay
state's maturing dollar debt .....................7 North Macedonia's gross foreign debt
edges up in Q2 ........................................ 12
Saudi Arabia ..................................................8
Romania ...................................................... 12
S&P Says Saudi Arabia 'A-/A-2' Ratings
Affirmed, Outlook Stable ..........................8 Romania aims to sell debt worth 4.0 bln
lei in October .......................................... 12
Fitch Downgrades Saudi Arabia to 'A';
Outlook Stable ..........................................8 Romania central bank's FX reserves edge
down in September................................. 13
South Korea ...................................................8
Romania records 2.13%/GDP budget
South Korea to sell 6.1 tln won in state shortfall in Jan-Aug ................................ 13
bonds in October ......................................8
Russia.......................................................... 13
Sri Lanka .......................................................9
Russian Eurobonds follow UST up on
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1
expectations of Fed rate cut ...................13 Algeria ......................................................... 18
Turkey .........................................................13 Algeria to slash spending, seek foreign
debt ........................................................ 18
Turkey's debt mess looms even as
Albayrak sees 'clean slate' ......................13 Egypt ........................................................... 18
Ukraine ........................................................14 Egypt plans to double average debt
maturity this year ................................... 18
Ukraine government, central bank show
united front to ease IMF concerns ..........14 Ethiopia ....................................................... 19
LATIN AMERICA AND CARIBBEAN ....................15 Fitch Revises Ethiopia's Outlook to
Negative from Stable; Affirms At 'B' ....... 19
Moody's Says Government Debt Burdens
Constrain Fiscal Strength for Latin Morocco ....................................................... 19
America ..................................................15 S&P says Morocco outlook revised to
Argentina.....................................................15 stable from negative on budgetary
consolidation efforts; 'BBB-/A-3' ratings
Fitch Says Argentina Crisis adds to affirmed .................................................. 19
Neighboring Economies' Headwinds .......15
Nigeria......................................................... 19
Argentina dips into IMF funds to pay off
maturing debt .........................................15 Nigerian lawmakers increase 2020 budget
outline based on higher oil price............. 19
"The dead don't pay" -Fernandez ally tells
IMF Argentina needs time to grow ..........16 South Africa ................................................. 20
Brazil ...........................................................16 South Africa debt-to-GDP could reach

95% by 2024, IIF says ........................... 20
Brazil's national debt rises to record high
79.8% of GDP .........................................16 Tunisia......................................................... 20
El Salvador ..................................................16 Tunisia's budget will rise in 2020 to $16.4

billion ..................................................... 20
Fitch Says El Salvador Budget a Key Test
for Bukele's Political Capital ...................16 OCEANIA .......................................................... 20
Jamaica .......................................................17 Solomon Islands .......................................... 20

S&P Says Jamaica Sovereign Credit Rating Moody's Says Affirms Solomon Islands' B3
Raised To 'B+' From 'B' On Improved Rating Maintains Stable Outlook ............. 20
External Position ....................................17 GLOBAL ............................................................ 21
Venezuela ....................................................17 Fitch Ratings: World GDP Growth to Hit an
Venezuela's Maduro seeks to revive Eight-Year Low in 2020 .......................... 21
stalled debt talks, bondholders EMERGING MARKETS ........................................ 21
unimpressed ...........................................17
Emerging markets suck in $37.7 bln
Putin, Maduro discussed Venezuela's debt
portfolio flows in snapback September ... 21
to Russia last week .................................17
AFRICA .............................................................18
Please note: The information contained herein is selected by the PDM Network Secretariat from and is
provided as a service to Subscribers. is considered to be a reliable source. However, the Secretariat

cannot guarantee the accuracy of information reported and is not responsible for any opinions expressed and data enclosed.
relations to normalise in the foreseeable future,

which likely means Chinese exports and
ASIA manufacturing sector investment could see little
growth over the next few years.
China "The economy is also likely to face elevated
uncertainties owing to U.S.-China tensions and
ongoing efforts to restructure the economy and
S&P Global affirms China's 'A+/A-1' reduce financial risks," S&P Global Ratings said.
ratings, stable outlook "U.S. restrictions on technology transfers to
30-Sep-2019 China could hinder productivity improvements
Sept 30 (Reuters) - Rating firm S&P Global and China is more likely to maintain strong
affirmed China's "A+/A-1" credit ratings on economic growth if the reform momentum picks
Monday, saying the country would maintain up."
above-average gross domestic product (GDP) The rating agency said it expected China's
growth and improved fiscal performance over real GDP per capita growth to remain above
the next three to four years. 5% annually in the next three years.
The rating agency kept the country's outlook It said it could raise its ratings on China if credit
stable and said it did not expect U.S.-China growth slows further, but may downgrade if it
2
sees a higher likelihood that China will ease its crore each.
efforts to stem rising financial risk and allow However, it will be Rs 14,000 crore in the last
higher credit growth to support economic two auctions. The government will issue floating
expansion. rate bonds to the extent of 10 per cent of gross
issuances during the year.
(Reporting by Mekhla Raina in Bengaluru; Editing by Borrowing through treasury-bills is being
Bernard Orr and Subhranshu Sahu) planned in such a way as to result in net
((Mekhla.Raina@thomsonreuters.com; outflows of Rs 20,000 crore during the third
+918067491775))
quarter of the fiscal. Switching of government
(c) Copyright Thomson Reuters 2019.
©Thomson Reuters 2019. All rights reserved. securities will continue while buyback of
securities will also be performed in the second
half, the secretary added. The central bank also
provides funds to the government under Ways
India and Means Advances (WMA) mechanism to help
it tide over short-term mismatch in receipts and
Govt sticks to FY20 Budget target; payments.
plans for overseas sovereign bonds not
Copyright 2019 IE Online Media Services Pvt. Ltd.,
firmed up distributed by Contify.com
01-Oct-2019 Copyright (c) 2019 IE Online Media Services Pvt. Ltd.,
Announcing its debt raising programme for distributed by Contify.com
October-March period, the government ©Thomson Reuters 2019. All rights reserved.
Monday said its borrowing in the current fiscal
will be within the budgeted Rs 7.1 lakh crore.
The Centre indicated that it will stick to the fiscal India Plans to Raise FPI Cap in
deficit glide path despite Rs 1.45 lakh crore Government Bonds as Per Comfort
worth of corporate tax cuts. The Finance
01-Oct-2019
Ministry, however, has not firmed up plans so
By Shivangi Acharya and Mukesh Jagota
far to raise funds in overseas markets through
NewsRise
issuance of sovereign bonds in foreign currency.
NEW DELHI (Oct 01) -- India plans to raise
With over 62 per cent of the budgeted borrowing
foreign portfolio investment limits in
being already completed in six months to
government bonds as per New Delhi’s
September 30, Economic Affairs Secretary Atanu “comfort” and it doesn’t need to undertake
Chakraborty said the remaining half of the such action until the current limits are
current fiscal will see the remainder of Rs 2.68 exhausted, a senior finance ministry official
lakh crore being borrowed in rupee said today, underscoring the government's
denomination. intent to gradually widen access to offshore
Despite the recent tax cuts hitting funds to the country's debt market.
government finances, he said the government "We have a mechanism for increasing foreign
is sticking to the glide path of keeping fiscal investment. As far as utilization is concerned, we
deficit at 3.3 per cent of the GDP in the don't wait till the existing limit is exhausted,” the
current fiscal. During the first half of this fiscal, official, who didn’t wish to be identified, told
the government has raised Rs 4.42 lakh crore, NewsRise. “The work starts when we still have
62.25 per cent of the total borrowing. "Rs 2.68 some headroom and based on market appetite.”
lakh crore borrowing indicates that the fiscal The comments come on a day when India raised
glide path as indicated in the budget is being the limit for foreign investment in government
maintained," he said. and corporate bonds by 482 billion rupees
On overseas sovereign bonds, he said, the ($6.80 billion). This move is part of a planned
bonds to be raised in external currency are semi-annual increase in limits on foreign
decided on the basis of current price, market investment announced on Mar. 28.
appetite and market conditions and related issue The increases in FPI limit are in line with the
and the structuring of the bond itself. "We need broader principle of opening the economy and
very careful calibrations and deliberations before financial markets, the official said.
it enters in the market. The work on that is “We will keep increasing as a general principle of
presently going on to work out the structures opening up our economy and investments,” the
and various pros and cons and it is a process official said. “This is driven by judgement of
which is long. For this year, all the borrowing of liquidity and depth of the market and what it can
the government will presently be in rupee- take."
denominated bonds," the secretary said. Foreign investors have long been attracted to
Finance Minister Nirmala Sitharaman has Indian government papers and have sought
announced in the Budget about government's greater access to the local debt market, drawn
plans to raise funds abroad in overseas by brisk growth in an economy that offers one of
currency through issuance of sovereign the highest yields in Asia.
bonds.
However, authorities have been chary over
As regards the second half borrowing, he said,
volatility risks that greater access to global funds
37.75 per cent of the total gross borrowing will
could bring. While the Reserve Bank of India
be spread over 17 weekly auctions of Rs 16,000
plans to keep the cap on foreign ownership of
3
government bonds at 6% in 2020, it will still (even adjusting for existing buffers of RBI
sharply lag holdings in Malaysia where overseas dividend and savings on PMKISAN) and could
funds own nearly a third of sovereign debt. lead to extra borrowing of Rs450-500bn in
Meanwhile, any potential slippage in meeting 4QFY20, fresh fiscal cushion may emerge if
this fiscal year’s budget deficit target of 3.3% government over-delivers on divestment front,"
of gross domestic product won’t be “large” Arora added.
and the government remains committed to Arora said, as of now, we remain fiscally vigilant
the fiscal glide path as mandated under the but not ignorant of possible buffers. The
fiscal responsibility and budget management benchmark 10-year paper is seen in the 6.40-
act, the official added. 6.80% range with a downside bias for the
India aims to narrow the budget deficit to 3.3% coming quarter.
of gross domestic product this financial year to Meanwhile, the Indian rupee strengthened
Mar. 31 from 3.4% a year earlier. However, marginally against US dollar after current
tepid government revenue on the back of a account deficit narrowed to $14.30 billion in
slowing economy has sparked worries that New June quarter against $15.80 billion a year ago.
Delhi could miss the budget gap aim. The rupee was trading at 70.82 a dollar, up
"We have some space to maneuver,” the official 0.08% from Monday's close of 70.87.
said, referring to hefty so-called dividend The benchmark Sensex index rose 0.38% or
payments by the RBI and a strong push to raise 147.71 points to 38815.04. So far this year, it
cash through state asset sales. Earlier this year, has gained 7.21%.
the RBI board approved a transfer of 1.76 trillion In the year so far, the rupee has weakened
rupees to the government, which is about 580 1.55%, while foreign investors have bought
billion rupees higher than New Delhi’s budget nearly $8.20 billion in Indian equities and $4.02
assumption, and includes a record 1.23 trillion billion in debt.
rupees of surplus transfer and 526.37 billion Most Asian currencies were weak as traders
rupees of excess provisions. await key US economic data and another round
“There may be some slippage at the end, but we of trade talks between the US and China.
will handle it when we get to it,” the official said. China renminbi was down 0.36%, Singapore
“It would not be as large as some may suggest.” dollar fell 0.14%, Japanese yen lost 0.12%,
Malaysian ringgit and South Korean won
- By Shivangi Acharya and Mukesh Jagota,
shivangi.acharya@newsrise.org; +91-11-66767700
declined 0.1% each, and Indonesian rupiah was
- Edited By Abhrajit Gangopadhyay marginally weak.
- Send Feedback to feedback@NewsRise.org The dollar index, which measures the US
- Copyright (c) 2019 NewsRise Financial Research & currency's strength against a basket of major
Information Services Pvt Ltd currencies, was at 99.493, up 0.12% from its
©Thomson Reuters 2019. All rights reserved. previous close of 99.377. Published by HT Digital
Content Services with permission from MINT.
Bond yields fall as government keeps Copyright (c) 2019 HT Digital streams Ltd
©Thomson Reuters 2019. All rights reserved.
borrowing plan unchanged
02-Oct-2019
Mumbai, Oct. 1 -- Government bond yields fell
India’s 5th Series of Sovereign Gold
for the second session on Tuesday after the
Centre kept its borrowing programme Bonds to Open for Subscription on Oct
unchanged for the second half of the fiscal 7
and said it will auction a new 10-year bond 04-Oct-2019
this week. By Mumbai Newsroom
The yield on the 10-year Indian government NewsRise
bond was at 6.684% compared with its previous MUMBAI (Oct 04) -- India will issue the fifth
close of 6.702%. Bond yield and prices move in series of sovereign gold bonds for 2019-20
opposite directions. that will open for subscription from Sep. 7 to
The government stuck to its gross borrowing Sep. 11, the central bank said today.
target for the second half of the fiscal at The nominal value of the bond, based on the
Rs.2.68 trillion, despite an expected revenue simple average of closing price of gold of 999
shortfall because of cuts in corporate taxes purity for the last 3 working days of the week
earlier in September. preceding the subscription period, works out to
"The budgeted borrowings should allay fears of 3,788 rupees per gram.
bond market on fiscal slippage for now. Even as However, the government of India, in
the curve may steepen with heavier issuance at consultation with the Reserve Bank of India, has
the belly, the overall curve still has scope to decided to offer a discount of 50 rupees per
come down from current levels," said Madhavi gram to the nominal value to investors applying
Arora, economist, Edelweiss Securities in a note. online and making the payment through digital
"The supply is light, with possible OMO supply modes, the RBI said in a statement.
further aiding the demand-supply dynamics. We The price of the gold bond for these investors
see RBI rate cycle still has some depth to would be 3,738 rupees per gram.
explore to help bonds. While fiscal risks are real The bonds will bear a fixed interest of 2.50% per
4
annum on the nominal value. The tenor of the The original plan for bond issuance this year was
bond will be for a period of eight years with exit to raise 825.7 trillion rupiah from domestic and
option from the fifth year. international sales.
The government will issue sovereign gold
bonds in five more tranches in the last six ($1 = 14,130.0000 rupiah)
months of this financial year to Mar. 31. The (Reporting by Maikel Jefriando; Writing by Gayatri
subscription for the other tranches will be Suroyo; Editing by Christian Schmollinger)
Oct. 21-Oct. 25, Dec. 2-Dec. 6, Jan. 13-Jan. ((gayatri.suroyo@thomsonreuters.com;
17, Feb 3.-Feb. 7 and Mar. 2-Mar. 6. +622129927609; Reuters Messaging:
New Delhi has been trying to nudge investors gayatri.suroyo.thomsonreuters.com@reuters.net))
away from holding physical gold and cut reliance
on imports of the precious metal in an attempt
to keep a lid on the current account deficit.
Iraq
- By Mumbai Newsroom; editorial@newsrise.org; 91-
22-6135 3300
- Edited by Mrigank Dhaniwala Moody's Says Government of Iraq's
- Send Feedback to feedback@NewsRise.org Dependence on Oil Revenues to Persist
- Copyright (c) 2019 NewsRise Financial Research & As Reform Momentum Remains Slow
Information Services Pvt Ltd
©Thomson Reuters 2019. All rights reserved. 03-Oct-2019
Oct 3 (Reuters) - Moody's :
• Moody's says government of Iraq's
dependence on oil revenues to persist as
Indonesia reform momentum remains slow
• Moody's says Iraq's structural and fiscal
Indonesia raises 7.12 trln rupiah from reform momentum likely to remain slow over
Islamic bonds auction medium-term
• Moody's says do not expect Iraq's
01-Oct-2019 dependence on oil production and sensitivity to
JAKARTA, Oct 1 (Reuters) - oil price swings to materially decline in the next
• Indonesia raised 7.12 trillion rupiah five years
($501.23 million) in an Islamic bonds auction • Moody's says the recent escalation in
on Tuesday, slightly higher than the indicative
tensions in the Middle East underscores Iraq's
target of 7 trillion rupiah, the financing and
susceptibility to geopolitical risk
risk management office at the Finance
Ministry said in a statement
• Moody's- although not Moody's central
• The weighted average yields for project- forecast, regional conflict affecting traffic
based sukuk sold on Tuesday were mixed through strait of Hormuz to pose major risk to
compared with yields of comparable sukuk sold Iraq's credit profile
in the previous auction
((Reuters.Briefs@thomsonreuters.com ;))
• Total incoming bids at Tuesday's auction
were 28.11 trillion rupiah
($1 = 14,205.0000 rupiah)

(Reporting by Tabita Diela; Editing by Andrew Iraq dollar bonds tumble 1.2 cents
Heavens) amid unrest, surging death toll
((tabita.diela@thomsonreuters.com;
+622129927621))
04-Oct-2019
(c) Copyright Thomson Reuters 2019. LONDON, Oct 4 (Reuters) - Iraq's dollar-
denominated sovereign debt dropped 1.2
cents to a four month low on Friday after the
death toll from days of violent demonstrations
Indonesia to top up bond issuance by across the country surged to 46 amid rapidly
$1 bln amid widening fiscal deficit accelerating unrest.
04-Oct-2019 The 2028 issue fell to as little as 95.14 cents -
JAKARTA, Oct 4 (Reuters) - Indonesia plans to the lowest level in four months, according to
raise its bond issuance this year by around data from Refinitiv. The bonds have fallen more
15.3 trillion rupiah ($1.08 billion) to 841 than 2 cents since the start of the week.
trillion rupiah, anticipating a widening of the The unrest, fuelled by popular rage over poor
2019 fiscal deficit to 1.9% of gross domestic living standards and corruption, is Iraq's biggest
product, a government official said on Friday. security challenge since the defeat of Islamic
The official, who has direct knowledge of the State in 2017.
matter, declined to be named because of the
sensitivity of the issue. (Reporting by Karin Strohecker; Editing by Tom
The government's current outlook for the 2019 Arnold)
deficit is 1.93% of GDP, already wider than its ((karin.strohecker@thomsonreuters.com;
original target of 1.84%, but officials have said +442075427262; Reuters Messaging:
karin.strohecker.reuters.com@reuters.net))
they may allow it to widen further to maintain
economic growth if needed amid a tax shortfall.
5
As Lebanon reforms go slowly, protests
Lebanon suggest widening anger
02-Oct-2019
Moody's puts Lebanon's Caa1 rating • "We see a dark future ahead" -
under review for downgrade Lebanese protester
• Important to deliver reforms, not
01-Oct-2019 announce them - UN official
Recasts with Moody's statement • Hariri adviser sees "convergence on
BEIRUT, Oct 1 (Reuters) - Credit ratings the urgency to move forward"
agency Moody's put Lebanon's Caa1 rating • Lebanon has lost international and
under review for downgrade on Tuesday, public confidence-MP
saying this reflected recent significant By Tom Perry and Laila Bassam
tightening in external financial conditions and BEIRUT, Oct 2 (Reuters) - In a country
a reversal in bank deposit inflows. fractured along sectarian lines, the unusually
"Anticipated external financial assistance has not wide geographic reach of protests over
yet been forthcoming and capital market access Lebanon's dire economy on Sunday suggests
at sustainable rates remains elusive," Moody's deepening anger with an entire class of
Investors service said. politicians who have jointly led it into crisis.
It said the "government's greater reliance on the While the protests were not big - Lebanon's
(central bank's) drawdown on foreign exchange divisions make large demonstrations rare - they
reserves to meet upcoming foreign-currency erupted from Beirut to the Bekaa Valley and
bond maturities risks destabilising the (central from Sidon in the south to Tripoli in the north.
bank's) ability to sustain the currency peg". In Tripoli, protesters took aim at prime ministers
Lebanon has a $1.5 billion Eurobond maturity in past and present, all Sunni Muslims under
November. Its currency has been pegged to the Lebanon's ruling conventions. In remote Brital, a
U.S. dollar at its current level for more than two flag of the powerful Shi'ite group Hezbollah was
decades. torn down. In Beirut, they chanted against all
Moody's downgraded Lebanon's rating to Caa1 in leaders, including the Shi'ite parliament speaker,
January. Christian head of state and Sunni premier.
Moody's said the review may extend beyond Lebanese leaders have said little about Sunday's
the usual 90 days and would allow the agency protests. For the coalition government led by
to "take stock of the government's progress in Prime Minister Saad al-Hariri, the focus remains
adopting the 2020 budget as planned before reviving the economy through long-delayed
the end of the year". reforms, such as fixing the power sector that
It would also allow it to take stock of the extent bleeds public funds while failing to meet
to which that "unlocks confidence-enhancing Lebanon's power needs.
external support packages" via CEDRE - a In the process, Lebanon hopes for an
reference to billions of dollars of international international seal of approval that will unlock
finance pledged to Lebanon last year, conditional billions in finance for investment.
on reforms. But Jalal Salma, who protested in Tripoli on
Lebanon, with one of the heaviest public debt Sunday, has more immediate worries. "There is
burdens in the world, has suffered from years of real hunger and we can't see a solution on the
low economic growth. Impetus to enact long- horizon. On the contrary, we see a dark future
delayed reforms has grown as capital inflows to ahead," he said.
the country from abroad have also slowed down. Lebanon's economic problems have been
Moody's said the review would also take stock of building for years.
whether Lebanon could secure financial support Shattered by war between 1975 and 1990,
from traditional Gulf Arab allies "which in turn Lebanon has one of the world's highest debt
would ease immediate liquidity risks and be burdens as a share of its economy. Economic
conducive to a broader growth recovery over the growth has been hit by regional conflict and
longer term". instability. Unemployment for the under 35s
Reflecting the increased pressure on runs at 37%.
Lebanon's finances, Fitch ratings agency The balance of payments has been negative for
recently downgraded it deep into junk years, meaning more money leaves the country
territory. Rival ratings agency S&P Global kept than enters it. This financial crunch has added to
Lebanon's credit rating at B-/B but warned that the impetus for reform.
it could be lowered, saying it considered its Foreign allies are not yet fully convinced by the
foreign exchange reserves sufficient to service pace of change. Some $11 billion pledged 18
government debt in the "near term". months ago in France, conditional on reform,
has yet to flow into the economy.
(Writing by Tom Perry "We stressed the importance of delivering on
Editing by Andrew Heavens and Peter Graff) reforms rather than announcing reforms, and of
((thomas.perry@thomsonreuters.com; Reuters
delivering the 2020 budget on time," Philippe
Messaging: thomas.perry.reuters.com@reuters.net))
Lazzarini, a top U.N. official in Lebanon, said on
Tuesday after meeting Hariri.
"CARVING UP THE CAKE"
6
The kind of steps needed to fix the national MP Alain Aoun of the Christian Free Patriotic
finances have long proven elusive. Sectarian Movement said the budget was a new test "for
politicians, many of them civil war veterans, the government and parliament to prove they
have long used state resources for their own have the ability" to take Lebanon out of the
political benefit and are reluctant to cede crisis.
prerogatives. "People have the right to protest and no one
Many of them are millionaires. Some are should blame them for that. Rather than looking
billionaires. for excuses, the political class has to take the
Lebanon ranked 138 of 180 countries in necessary courageous measures and reforms to
Transparency International's 2018 corruption restore confidence that it lost in the public
perceptions index. opinion and in the international community," he
"The politicians have always been in conflict on told Reuters.
how to carve up the cake. This obstructs any
reforms and reveals them as a bunch of liars to (Writing by Tom Perry
international opinion," said Mahmoud Faqih, a Editing by Ellen Francis and Peter Graff)
veteran campaigner who protested in Beirut. ((thomas.perry@thomsonreuters.com; Reuters
"The wide scope of these protests is evidence of Messaging: thomas.perry.reuters.com@reuters.net))
the buildup of the crisis and that it is rubbing
salt in the citizens' wounds," said Faqih, 35, a
journalist.
Public concerns have been intensified by the Lebanon central bank ready to repay
emergence of a black market where dollars state's maturing dollar debt
cost more than the pegged exchange rate. The
03-Oct-2019
central bank introduced new steps on Tuesday
BEIRUT, Oct 3 (Reuters) - Lebanon's central
to organise the provision of dollars for key
bank is ready to repay the state's maturing
imports.
dollar-denominated debt to protect the
The government has vowed to maintain the peg.
country's financial credibility, Governor Riad
Maha Yahya, director of the Carnegie Middle
Salameh said on Thursday.
East Center, said concern over the currency had
One of the world's most heavily indebted states,
"become a daily topic of conversation" and
with a public debt burden of 150% of GDP,
Sunday's protests reflected that.
Lebanon has a $1.5 billion Eurobond maturing in
"What is very frustrating for many is that there
November.
doesn't seem to be a horizon. It's not like we
The government has declared "an economic
have a plan - that we can grit our teeth and bear
emergency" and vowed to enact long-delayed
it for the next six months - and everything will
reforms to rein in spending.
be okay," she said.
"The maturities that the Lebanese state has, we
MORE URGENCY SEEN
have also prepared for them, to pay for them in
The government has won some praise for
dollars," Salameh told a conference on
efforts to reduce this year's deficit and its
Thursday. "I believe this matter is essential, and
plan to fix the power sector - moves the IMF
called "very welcome first steps on a long Banque du Liban is carrying this out for
road". monetary reasons (and) for the protection of
The 2019 budget included politically difficult Lebanon's credibility."
moves, notably a three-year state hiring freeze. Finance Minister Ali Hassan Khalil told Reuters
this week that Lebanon had begun preparing
But proposals for a temporary public sector pay
to issue a Eurobond of around $2 billion in
cut were torpedoed.
October to meet state financing needs.
Knowing more must be done, politicians aim to
Salameh also said there had been a rise in
further cut the deficit in the 2020 budget but
demand for U.S. dollars in Lebanon since June,
without raising new taxes.
which he attributed to an increase in imports,
"Obviously the speed at which decisions are
although he questioned whether these were
being made is not very promising, and the
intended for use locally or outside Lebanon.
government and the political parties have to
Lebanon's pound has been pegged at 1,507.5
move much faster," Nadim Munla, Hariri's senior
pounds to the dollar for more than 20 years but
adviser, told Reuters. But "we have noticed that
the price has recently risen above that level on
in the last few weeks that there is convergence
the unofficial, or parallel, market, reflecting an
on the urgency to move forward."
economic crisis stemming from low growth and
In an interview on Monday, he also expressed
slowing capital inflows.
hope that upcoming trips by Hariri to the United
The central bank took steps on Tuesday to
Arab Emirates and Saudi Arabia would yield
provide banks with U.S. dollars to back imports
"something concrete" after "encouraging signs"
of fuel, wheat and medicine. Some importers
of a Gulf Arab readiness to deposit funds in
have threatened to strike because they cannot
Lebanon.
secure dollars at the official rate from banks and
A recent trip by Hariri to France had also been a
are being forced to pay more on the parallel
success, he said, citing agreement on a donor
market.
state follow-up mechanism for Lebanon, the
Salameh said there had always been some
scheduling of a high-level meeting next month,
difference between the official peg and money
and French investment interest.
exchangers' rates and that the central bank
7
would preserve the stability of the official rate. Saudi Arabia's institutional framework will
More demand for cash dollars at money remain broadly steady through 2022
exchange offices since June pushed the cost of • S&P says expect Saudi Arabia's real GDP
dollars 1% to 3% above the official rate at the will contract by about 0.4% this year, driven
banks, he said. mainly by fall in oil production tied to OPEC deal
"This matter goes back to an increase in imports & the attacks
of some materials, and we do not know if all this • S&P says expect Saudi Arabia to
importing is for local consumption or not," he enhance attempts to develop red sea export
said, without elaborating. routes that would help avoid the volatile Arabian
The only country with which Lebanon has an gulf
open land border is Syria, which has suffered • S&P says expect Saudi Arabia will
fuel shortages due to Western sanctions on its expedite plans to expand east-west pipeline to
government. the red sea port of yanbu to an estimated 7.3
Salameh said commercial banks must make sure million barrels per day
that lines of credit fund imports only for local
consumption. ((Reuters.Briefs@thomsonreuters.com ;))
"This is essential not only for the finances of (c) Copyright Thomson Reuters 2019.
Lebanon, but also for its reputation and keeping
it within the global finance system."
Salameh also expressed hope that Lebanon's Fitch Downgrades Saudi Arabia to 'A';
government would further narrow its budget Outlook Stable
deficit. "We hope the government implements a
30-Sep-2019
budget for 2020 that gives a positive signal to
Sept 30 (Reuters) - FITCH
the markets by reducing the deficit," Salameh
• Downgrades Saudi Arabia to 'A';
added. outlook stable
• Fitch says Saudi Arabia's IDR
(Reporting by Ellen Francis, Tom Perry and Laila
downgrade reflects rising geopolitical and
Bassam; Editing by Hugh Lawson and Kirsten
military tensions in gulf region
Donovan)
((Ellen.Francis@thomsonreuters.com ;)) • Fitch says downgraded Saudi Arabia's
(c) Copyright Thomson Reuters 2019. long-term foreign-currency IDR to 'A' from 'A+'
• Fitch says Saudi Arabia's IDR downgrade
reflects revised assessment of vulnerability of its
economic infrastructure
Saudi Arabia • Fitch says Saudi Arabia is vulnerable to
escalating geopolitical tensions given its
S&P Says Saudi Arabia 'A-/A-2' Ratings prominent foreign policy stance
Affirmed, Outlook Stable • Fitch says Saudi Arabia's IDR downgrade
reflects continued deterioration in its fiscal and
28-Sep-2019
external balance sheets
Sept 27 (Reuters) - S&P:
• Fitch says although oil production
• S&P says Saudi Arabia 'A-/A-2' ratings
following attacks was restored, believe there is
affirmed; outlook stable
risk of further attacks on Saudi Arabia, which
• S&P says expect Saudi Arabian oil
could lead to economic damage
production to rebound quickly following the
sept. 14 attacks on two oil production • Fitch says its forecasts for Saudi Arabia's
facilities fiscal, external balance sheets do not
• S&P says affirming A-/A-2' long- and incorporate proceeds from potential public
short-term sovereign credit ratings on Saudi offering of Saudi Aramco
Arabia
• S&P, on Saudi Arabia, says geopolitical
risks remain high
• S&P says stable outlook reflects
expectation that Saudi Arabian oil production
facilities that were hit in sept. 14 attacks will be South Korea
swiftly repaired
• S&P says Saudi Arabia's rating could
South Korea to sell 6.1 tln won in state
come under downward pressure in scenario in
which Saudi's oil infrastructure was subject to
bonds in October
repeated foreign attacks 01-Oct-2019
• S&P says expect Saudi Arabia's SEOUL, Sept. 26 (Yonhap) -- South Korea plans
government to try to maintain balance between to sell 6.1 trillion won (US$5 billion) in state
spending to support economy & attempting to bonds next month, the finance ministry said
contain fiscal deficits Thursday.
• S&P says expect Iran and Saudi Arabia The government will issue 1.2 trillion won in
to "shy away from a fully fledged direct military bonds with a maturity of three years and 1.2
confrontation" trillion won in five-year bonds, according to the
• S&P says expect key parameters of Ministry of Economy and Finance.
8
It also intends to sell 1.4 trillion won in bonds 5% of the country's gross domestic product.
with a maturity of 10 years and 500 billion won Travelers have canceled hotel and flight
in 20-year Treasurys, while floating 1.4 trillion bookings.
won and 400 billion won in bonds with a
maturity of 30 years and 50 years, respectively. (Reporting by Shihar Aneez)
((shihar.aneez@thomsonreuters.com; +94-11-232-
colin@yna.co.kr 5540; Reuters Messaging:
Copyright (c) 2019 Yonhap News Agency shihar.aneez.thomsonreuters.com@reuters.net twitter:
©Thomson Reuters 2019. All rights reserved. https://twitter.com/shiharaneez) )
Sri Lanka
Thailand
Sri Lanka's interim budget aims for
2.2% deficit in Jan-April Fitch Ratings: Thailand's Economy,
Banks Resilient to Rising Global Risks
04-Oct-2019
COLOMBO, Oct 4 (Reuters) - Sri Lanka's budget 02-Oct-2019
for the first four months of 2020 targets a Fitch Ratings-Bangkok-October 02: Thailand's
budget deficit of 2.2% of GDP, two finance economic fundamentals will remain sound
ministry officials said on Friday, a goal despite challenges from global trade tensions,
analysts said was ambitious given the while the Thai banking sector is less exposed
country's economy was recovering from a to external risks, such as a slowdown in
political crisis and deadly attacks. China, relative to other Fitch-rated banks in
The cabinet this week decided to present an Asia, according to Fitch Ratings' sovereign
interim budget for January-April period because and banking analysts at its annual global risk
conference in Bangkok.
of a presidential election next month and
Fitch Ratings (Thailand)'s annual global risk
parliamentary polls early next year.
conference was attended by more than 300
A full-year budget is expected to be presented to
executives and officials from the regulatory,
parliament under the new government,
investor, financial and corporate sectors. Dr
government officials say.
"We have aimed for 2.2% of the GDP in the
Uttama Savanayana, Minister of Finance, was
interim budget," a top finance ministry official the guest of honour at the event and provided
told Reuters. Another finance ministry official the keynote address.
confirmed the deficit goal. Mr. James McCormack, Managing Director,
The interim budget is expected to be presented Global Head of Sovereigns at Fitch Ratings, said
to parliament later this month with a revenue the revision of the rating Outlook on Thailand's
target of 750 billion Sri Lankan rupees, officials 'BBB+' sovereign to Positive in July 2019 was
said. driven by Fitch's increasing confidence that
The government had originally aimed at a lingering political risks are unlikely to derail
budget deficit of 3.5% for 2020. However, it is sound macroeconomic management. Thailand
yet to release its revised target for next year. overcame a major political hurdle earlier this
"The 2.2% deficit in the first four months of year with the formation of a new civilian-led
2020 is an ambitious target," said Danushka government following elections in March, and
the country has maintained sound external
Samarasinghe, CEO at Softlogic Capital Markets,
and public finance positions for several years.
adding that the economy needs more time for
Risks to the growth outlook stem primarily from
recovery amid political uncertainty after the
the challenging global trade environment,
elections.
although this may be mitigated by the more-
The Indian Ocean island nation's 2019 budget
supportive monetary policy and infrastructure
deficit is likely to be 100 basis points more than
projects, which are intended to increase
the expected 4.4% of the GDP this year, pushing
investment and support growth in the medium
it to its highest in three years as spending cuts
term. Global risks centre on policy uncertainty,
failed to offset shortfalls in revenues following
particularly as it affects the trade outlook, and
Easter Sunday blasts and a near two month
the UK's upcoming Brexit deadline, which could
political crisis in the last quarter of 2018.
result in a recession in the UK and weaker
Investor confidence nosedived last year after
growth in the euro zone. Fitch believes
President Maithripala Sirisena abruptly sacked
widespread monetary easing by central banks
his Prime Minister Ranil Wickremesinghe and
cannot fully offset the slowdown in trade, and
dissolved parliament. That was later ruled
policymakers will turn increasingly to
unconstitutional, and Wickremesinghe was
accommodative fiscal policies, including in
reinstated.
countries where government debt levels are
The crisis created panic and uncertainty among
already high.
investors, who dumped Sri Lankan government
In his presentation on the banking sector, Mr.
bonds and other assets, sending the rupee
Parson Singha, Senior Director, Financial
currency to record lows.
Institutions at Fitch Ratings (Thailand) Limited,
The Easter Sunday attacks claimed by Islamic
highlighted that Thai banks were well-
militants mainly hit tourism, which accounts for
9
positioned, in terms of potential vulnerabilities
and loan-loss buffers, and they were able to
cope with downside stresses such as a China United Arab Emirates
economic slowdown or a property-market
downturn. However, the upside for Thai banks' Dubai ready to take on more debt if
financial performance may be limited in the near needed
term due to the challenging operating
02-Oct-2019
environment. A sharp slowdown in China
By Alexander Cornwell
would likely have the most impact on
developed markets, such as Hong Kong and
DUBAI, Oct 2 (Reuters) - Dubai continues to
service its debt and is ready to take on more if
Singapore. Meanwhile, banking sectors with
needed, an economic official said on
high property exposures include those in
Wednesday, adding that current debt was
developed markets, such as Australia and New $124 billion.
Zealand, and in emerging markets such as "We continue to service the debt on time, as
Malaysia. scheduled. We are ready to take on more debt,
Mr Mervyn Tang, Senior Director, Head of ESG if need be," Raed Safadi, the chief economic
Research, Sustainable Finance at Fitch Ratings, advisor at Dubai's Department of Economic
discussed regional trends in environmental, Development, said at an event.
social and corporate governance (ESG). ESG His comments came after Reuters had reported
factors have some level of influence on the on Sept. 10, citing sources, that the government
credit ratings of around 22% of corporate of Dubai has held talks with banks about a
issuers in the world, with the Governance potential issue of U.S. dollar-denominated
element accounting for more than half of bonds, in what would be its first international
affected issuers. Emerging-market credit ratings debt sale since 2013.
are more often influenced by governance issues. Rating agencies have warned Dubai about the
Financial transparency and governance structure debt of state-owned entities amid an
issues relating to key-person risks, concentrated economic slowdown in the region.
ownership and board independence are most The size of the Dubai economy was 398.5 billion
common in Asia. Environmental and social UAE dirham ($108.50 billion) at the end of 2018.
factors have more influence on credit ratings in Fitch said earlier this month that a significant
the developed markets than in emerging proportion of $23 billion in loans to Dubai
markets due to tighter regulation and stiffer government-related entities due to mature by
penalties for violations. end-2021 may be restructured again.
"We have proven time and time again that
Media Relations: Peter Hoflich, Singapore, Tel: +65 actually investments Dubai realizes are worthy
6796 7229, Email: peter.hoflich@thefitchgroup.com;
investments and the rates of return more than
Leslie Tan, Singapore, Tel: +65 6796 7234, Email:
leslie.tan@thefitchgroup.com. compensate for covering the debt servicing
Additional information is available on burden and of course create growth and drives
www.fitchratings.com growth," said Safadi.
Copyright © 2019 by Fitch Ratings, Inc Dubai's economy was hit hard in 2009, when
©Thomson Reuters 2019. All rights reserved. a global credit crisis caused its real estate
market to crash and threatened to force some
of its state-linked companies to default on
billions of dollars of debt.
Thailand plans to sell up to $4.7 bln of
Dubai has seen another slump in the real estate
govt bonds in Oct-Dec market over the past few years, but the
02-Oct-2019 downturn has not been as severe as the one in
BANGKOK, Oct 2 (Reuters) - Thailand plans to 2009.
sell up to 144 billion baht ($4.70 billion) of
government bonds in the October-December ($1 = 3.6728 UAE dirham)
period as part of a debt-restructuring effort, (Reporting by Alexander Cornwell; Editing by Saeed
the finance ministry said on Wednesday. Azhar & Kim Coghill)
The baht-denominated bonds, to be sold ((sylvia.westall@thomsonreuters.com; Dubai
domestically, will have maturities of between Newsroom +971 4453 6488; Reuters Messaging:
five and 48 years, the ministry said in a sylvia.westall.thomsonreuters.com@reuters.net))
statement. That compares with up to 128 billion
baht of government bond issues planned for the
previous quarter.
EUROPE
($1 = 30.66 baht)
(Reporting by Orathai Sriring and Satawasin
Staporncharnchai
Editing by Shri Navaratnam) Albania
((orathai.sriring@tr.com; +662 6489729; Reuters
Messaging: Albania to sell 2 bln leks (16.2 mln
orathai.sriring.thomsonreuters.com@reuters.net))
(c) Copyright Thomson Reuters 2019. euro) of 10-yr T-notes on Oct 7
02-Oct-2019
10
TIRANA (Albania), October 2 (SeeNews) – Belarusian rubles in 8M to the equivalent of 43.6
Albania will offer 2 billion leks ($17.7 billion Belarusian rubles, however it rose 2.1%
million/16.2 million euro) worth of 10-year in August.
Treasury notes at an auction on October 7, the In 2019, the Finance Ministry is planning to
finance ministry said in its debt issuance allocate $2.7 billion for servicing and redeeming
calendar for the fourth quarter of 2019. foreign state debt, including $1.24 billion for
At the latest auction of 10-year T-notes held on loans from Russia. Another 2.93 billion rubles or
July 4, the finance ministry sold 3 billion leks the equivalent of $1.32 billion will be spent on
worth of government paper. servicing and redeeming internal debt.
The coupon rate on the issue was set at 5.53%, The foreign debt ceiling is $21 billion and
down from 5.85% in the last auction of 10-year domestic debt should not rise above 10 billion
T-notes held in April, according to figures rubles in 2019.
published on the website of the finance ministry.
(Our editorial staff can be reached at
(1 euro = 120.937 leks) eng.editors@interfax.ru)
Copyright 2019 SeeNews. All rights reserved. Copyright © 2019 Interfax. All rights reserved.
©Thomson Reuters 2019. All rights reserved. ©Thomson Reuters 2019. All rights reserved.
Belarus Bosnia
Belarusian foreign debt fell 1.9% to Bosnia cabinet approves interim
$16.9 bln in 8M financing for 4th quarter due to lack of
30-Sep-2019 budget
MINSK. Sept 30 (Interfax) - Belarus had state 03-Oct-2019
foreign debt of $16.56 billion as of September SARAJEVO, Oct 3 (Reuters) - Bosnia's central
1, 2019, down $300 million or 1.9% from the government approved on Thursday 237.5
start of 2019, adjusted for exchange-rate million marka ($133 million) in temporary
differences, the Finance Ministry said. financing for the fourth quarter after the
Foreign debt grew $100 million or 0.6% in country's tripartite inter-ethnic presidency
August. It fell 1.2% in July and grew 0.6% in had failed to approve the 2019 state budget.
June. Nearly one year after a general election, the
Belarus in 8M 2019 borrowed a total of $806.5 government is still working in a caretaker
million abroad, including $246.7 million in capacity because political divisions have made it
August. In 8M it raised $150.5 million with bond impossible to form a new cabinet.
placements on external markets and borrowed The decision was made in a telephone
$521.8 million from the Russian government and conference because the caretaker cabinet could
Russian banks, $67.1 million from the not convene due to lack of a quorum, the
International Bank for Reconstruction and government said in a statement.
Development (IBRD), $24.9 million from the The $132.7 million in quarterly financing was
European Bank for Reconstruction and the same as for the previous three quarters.
Development (EBRD) and Nordic Investment The main disagreement between the Serb, Croat
Bank (NIB) and $42.2 million from Exim Bank of and Bosniak members of the tripartite
China. presidency is over whether Bosnia should pursue
Foreign debt repayments amounted to $1.146 NATO membership.
billion in 8M 2019, including $116.2 million in While the Bosniak main party, advocating NATO
August. In the 8M, Belarus repaid $508.3 million integration, is halting the formation of a new
to the Russian government, $410.9 million to central cabinet, the Serb and Croat parties are
Exim Bank of China, $176.5 million to the blocking the work of the national parliament,
Eurasian Fund for Stabilization and Development thus halting the implementation of about 1
(EFSD), $65.4 million to the IBRD, $0.8 million billion euros ($1.1 million) worth infrastructure
to the EBRD and NIB and $0.7 million to the projects.
U.S. Commodity Credit Corporation (CCC). Bosnia is made up of two autonomous regions -
Domestic debt amounted to 8.8 billion the Serb Republic and the Federation dominated
Belarusian rubles on September 1, 2019, by Bosniaks and Croats - which are linked via a
down 100 million rubles or 0.9% since the weak central government.
start of the year, but falling 4.3% in August The Serb Republic has formed a new
after rising 1% in July. government but the Federation, where no
The Finance Ministry placed domestic bonds political party or coalition won a clear majority,
worth $688 million in 8M, including $36.8 million is still struggling to form its own government.
in August. FX-denominated and local currency
government bonds worth $466.3 million and (1$=1.790 Bosnian marka)
227.2 million Belarusian rubles were redeemed ($1 = 0.9105 euros)
in 8M, including $306 million in FX bonds in (Reporting by Daria Sito-Sucic in Sarajevo
August. Editing by Matthew Lewis)
Overall public debt fell 4% or 1.8 billion ((daria.sito-sucic@thomsonreuters.com; +38733 295

11
484; Reuters Messaging: daria.sito- Oct 4 (Reuters) -
sucic.thomsonreuters.com@reuters.net)) • Fitch affirms Estonia at 'AA-'; outlook
(c) Copyright Thomson Reuters 2019. stable
• Fitch says banking sector activity has not
been directly affected by continued high-profile
money laundering scandals by Nordic banks in
Czech Republic Estonia
Foreign holdings of Czech domestic ((Reuters.Briefs@thomsonreuters.com ;))

bonds rise in August (c) Copyright Thomson Reuters 2019.
30-Sep-2019
PRAGUE, Sept 30 (Reuters) - The proportion of
non-residents holding Czech state domestic North Macedonia
bonds edged up to 42.14% in August from
40.88% in July, Finance Ministry data showed
on Monday. North Macedonia's gross foreign debt
Foreigners' holdings are more than double levels edges up in Q2
seen prior to the central bank's intervention 01-Oct-2019
regime to keep the crown currency weak that SKOPJE (North Macedonia), October 1
ran from 2013-2017. Foreigners held a record (SeeNews) – North Macedonia's gross foreign
51.35 percent of domestic bonds in September debt totalled 8.3 billion euro ($9.1 billion) at
2017. the end of the second quarter of 2019, up
0.9% on the previous quarter, official figures
(Reporting by Mirka Krufova show.
Editing by Jan Lopatka) The external debt of North Macedonia's deposit-
((robert.muller@thomsonreuters.com; taking corporations increased in the second
+420224190475; Reuters Messaging:
quarter while the debt of the government and
robert.muller.thomsonreuters.com@reuters.net))
(c) Copyright Thomson Reuters 2019. the central bank fell, according to figures
published by the central bank on Monday.
($=0.9159 euro)
Moody's Upgrades Czech Republic's Copyright 2019 SeeNews. All rights reserved.
Ratings to AA3, Changes Outlook to ©Thomson Reuters 2019. All rights reserved.
Stable from Positive
04-Oct-2019
Oct 4 (Reuters) - Romania
• Moody's upgrades Czech Republic's
ratings to AA3, changes outlook to stable from
positive Romania aims to sell debt worth 4.0
• Moody's says upgrade reflects Czech bln lei in October
Republic's fiscal strength metrics have further 30-Sep-2019
improved and compare now very favourably BUCHAREST, Sept 30 (Reuters) - Romania's
to rating peers finance ministry aims to sell just under 4.0
• Moody's - changed Czech Republic's billion lei ($920.11 million) worth of leu
long-term foreign currency bond ceiling to aa1 currency bills and bonds in October, including
from aa2, long-term foreign currency deposit 495 million lei at non-competitive tenders, it
ceiling to aa3 from a1 said on Monday.
• Moody's says aside from very strong The ministry said it scheduled eight bond
government balance sheet, fiscal flow indicators, tenders in October, with residual maturities
Czech Republic shows further improvements to ranging from 2.8 to 15 years, as well as one
its economic strength auction for 200 million lei worth of one-year
• Moody's - outlook reflects Czech treasury bills. Romania sold a less than planned
Republic's fiscal strength indicators that will be 2.83 billion lei worth of debt in September.
resilient & in line versus aa3-rated peers even in So far this year, Romania has sold just under
an adverse scenario 36.1 billion lei and 506.7 million euros on the
local market. It also tapped foreign markets in
((Reuters.Briefs@thomsonreuters.com ;)) March and July for 5 billion euros worth of 2026,
(c) Copyright Thomson Reuters 2019. 2031, 2034 and 2049 Eurobonds.
($1 = 4.3473 lei)

(Reporting by Luiza Ilie)
Estonia ((luiza.ilie@thomsonreuters.com; +4021 527 0312;
Reuters Messaging:
Fitch Affirms Estonia at 'AA-'; Outlook luiza.ilie.thomsonreuters.com@reuters.net))
Stable
04-Oct-2019

12
back of US Treasuries as the likelihood of a
rate cut by the Federal Reserve increases.
Romania central bank's FX reserves Sovereign spreads widened somewhat.
edge down in September Russia's benchmark 2030 bonds were up 16
01-Oct-2019 basis points from previous closing by 6:15 p.m.
BUCHAREST, Oct 1 (Reuters) - The Romanian Moscow time at 114.19% with yield at 2.84%
central bank's foreign exchange reserves, per annum, 5 bps lower. Three-year US
excluding 103.7 tonnes of gold, fell by 196 Treasuries were up 17 bps from previous closing
million euros to 35.42 billion euros ($38.61 at 101.26%, with yield down 8 bps to 1.39%.
billion) in September, the bank said on Spread between Russia-30 and UST3 widened 3
Tuesday. bps to 145 bps.
Inflows were 1.01 billion euros, mainly Russia's 2043 bond was up 31 bps at 127.16%,
representing changes in credit institutions' yielding 4.09%, down 1 bp; the 2042 bond was
foreign currency-denominated required reserves up 62 bps at 125.12%, yielding 3.93%, down 4
and inflows into the finance ministry's accounts. bps; the 2026 bond was up 22 bps at 109.16%
Outflows totalled 1.21 billion euros, and with yield down 3 bps to 3.21%; and the 2023
reflected changes in credit institutions' foreign bond rose 9 bps in price to 109.42% yielding
currency required reserves, interest payments 2.36%, down 3 bps.
and principal repayments on foreign currency The 30-year bond maturing in 2047 was up 32
public debt. bps to 118.71% with yield down 2 bps at
The central bank said October payments to 4.11%; and the 10-year bond maturing in 2027
service external public and publicly guaranteed was up 14 bps at 106.24%, with yield down 2
foreign currency debt amounted to 264 million bps at 3.33%.
euros.
Copyright © 2019 Interfax. All rights reserved.
($1 = 0.9173 euros) ©Thomson Reuters 2019. All rights reserved.
(Reporting by Luiza Ilie
Editing by Radu Marinas)
((luiza.ilie@thomsonreuters.com; +4021 527 0312;
Reuters Messaging:
luiza.ilie.thomsonreuters.com@reuters.net))
Turkey
Turkey's debt mess looms even as
Albayrak sees 'clean slate'
Romania records 2.13%/GDP budget 30-Sep-2019
shortfall in Jan-Aug Recasts with quotes, IMF, senior bankers
ANKARA, Sept 30 (Reuters) - Turkey's finance
03-Oct-2019
minister said on Monday that steps taken by
BUCHAREST, Oct 3 (Reuters) -
Romania's
the government would give banks a "clean
consolidated budget deficit expanded to
slate" to begin lending again, but bankers and
2.13% of gross domestic product at the end of
analysts said Ankara needed to do more to
August from 1.76% in the first seven months,
understand the extent of the mess and to
the finance ministry said on Thursday.
finally clear it up.
The seven-month shortfall compares with a gap
Two senior bankers said that big lenders may
of 1.5% in the same period of 2018. The ruling
not completely abide Ankara's most aggressive
Social Democrats are targeting a budget deficit
move so far: a directive two weeks ago for
of 2.8% this year.
banks to reclassify as non-performing loans
In nominal terms, the deficit stood at 21.9 billion
(NPLs) some 46 billion lira ($8.2 billion) in debt.
lei ($5.05 billion). Budget revenues were 204.1
Sour loans are among the worst hangovers from
billion lei, or 19.8% of GDP. Spending stood at
last year's currency crisis, which knocked some
220.1 billion lei.
30% off the Turkish lira and left companies
unable to service what were once cheap foreign-
($1 = 4.3331 lei)
(Reporting by Radu Marinas)
currency loans.
((radu.marinas@thomsonreuters.com; +40 21 527 04 Turkish banks held some 124 billion lira in
33; Reuters Messaging: NPLs at the end of August, up from 79.5
radu.marinas.thomsonreuters.com@reuters.net)) billion lira a year earlier.
(c) Copyright Thomson Reuters 2019. Finance Minister Berat Albayrak, in an annual
presentation of economic forecasts, said "we
have taken innovative steps for banking-sector
NPLs," adding it was time for private banks to
Russia take a "proactive role" in extending credit.
"We will see the beginning of a clean slate for
Russian Eurobonds follow UST up on banks in the upcoming period. We think they will
expectations of Fed rate cut return to providing financing," Albayrak said in
Ankara.
03-Oct-2019
Private Banks in particular have hesitated to
MOSCOW. Oct 3 (Interfax) - Prices for most
lend since the economy tipped into recession,
Russian Eurobonds are up on Thursday on the
citing uncertainty around fiscal policy and
13
continued volatility in the lira, and hoping the government a new loan programme worth
Treasury would ease any losses on the loans. around $5-6 billion.
Inaction on the bad debt through the spring and Oleksiy Honcharuk and Central Bank Governor
summer frustrated the government, which itself Yakiv Smoliy made a public show of unity as
was not willing to put money on the line. they sat side by side in a garden on the grounds
That prompted the BDDK banking watchdog to of Kiev's main government building and signed
issue the directive on Sept 17 telling banks to an agreement on achieving sustainable growth.
provision for losses on the NPLs. Kiev's Western-backed leadership wants the
But the two senior bankers involved in NPL IMF's financial support to keep the economy
discussions said that, before the BDDK made its stable and signal to investors it is serious about
46 billion-lira announcement, big lenders had reform and tackling corruption.
already reclassified as NPLs some 10-15 billion But concerns about the autonomy of the central
lira worth of the loans. bank, which has complained publicly in recent
The bankers added that the rest covered by the weeks about being subjected to pressure from
BDDK directive may not be reclassified, in part various quarters, have weighed on Ukraine's
because banks have restructured part of it. prospects of receiving the loans.
"This BDDK decision should be interpreted as "We very much respect the independence of the
leaving it up to the banks to decide," one of National Bank... because an independent
them said, requesting anonymity because he regulator is the guarantee of the country's
was not authorized to speak publicly about the macroeconomic stability," Honcharuk said.
issue. He also said the government would support
RISK OF NON-PAYMENT the central bank's target to bring inflation
Beyond the 46 billion lira, banks have on their down to 5% by the end of 2020, and wanted
books some 296 billion lira in so-called Stage to cut the budget deficit to 1.5% of gross
2 loans, or those for which the risk of non- domestic product in 2024 from 2.3% for this
payment has increased significantly, the year.
banker said. Smoliy said effective coordination of economic,
Between 15-20% of that would become NPLs fiscal and monetary policies was crucial to
under a "worst case scenario," he added. ensure price stability.
Banks are considering strategies to hang on to The central bank has said attempts were being
the loans long enough to extract some profit. made to intimidate it and halt the progress of
Reuters reported last week that among them is certain reforms, describing itself as terrorised
creating an asset management company (AMC), after the house of a former bank governor was
sometimes called a "bad bank," to house higher- set ablaze.
quality NPLs. During talks with an IMF mission in September
The International Monetary Fund said banks' about a new loan programme, President
impairment and restructuring practices should Volodymyr Zelenskiy reassured the Fund that
be reviewed, and urged stress tests on the the central bank's independence would remain
assets and other measures to shore up market intact.
confidence. The government has also sought to reassure the
"Further steps to clean up bank and corporate IMF that there would be no rollback of an IMF-
balance sheets would support financial stability backed decision in 2016 to nationalise
and stronger and more resilient growth over the PrivatBank, Ukraine's largest lender, which was
medium term," the IMF said in a report last owned by businessman Ihor Kolomoisky.
week. Zelenskiy has long-standing business ties to
Kolomoisky and repeatedly denied suggestions
($1 = 5.6390 liras) he would help Kolomoisky regain control of the
(Reporting by Tuvan Gumrukcu and Nevzat lender, which was taken into state hands against
Devranoglu in Ankara, and Daren Butler and Ali Kolomoisky's wishes.
Kucukgocmen in Istanbul; But last week Oleksandr Danylyuk, a top
Writing by Jonathan Spicer;) security official, left Zelenskiy's administration,
((jonathan.spicer@reuters.com))
citing concerns about the fate of PrivatBank and
the central bank. Danylyuk had been finance
minister at the time of PrivatBank's
nationalisation.
Ukraine The central bank says a $5.6 billion hole had
been left in PrivatBank's finances due to shady
Ukraine government, central bank lending practices under Kolomoisky's ownership.
Kolomoisky disputes that.
show united front to ease IMF concerns
Zelenskiy met Kolomoisky publicly in September
03-Oct-2019 and days later Kolomoisky told reporters he saw
By Natalia Zinets scope for a compromise on PrivatBank. Any
KIEV, Oct 3 (Reuters) - Ukraine's Prime rollback of PrivatBank's nationalisation would
Minister on Thursday promised to respect the likely prompt the IMF to freeze aid.
central bank's independence, seeking to ease
concerns from the International Monetary (Writing by Matthias Williams)
Fund as it considers whether to give the ((matthias.williams@thomsonreuters.com ;))
14
Argentina dips into IMF funds to pay

off maturing debt
LATIN AMERICA AND 04-Oct-2019
CARIBBEAN By Jorge Iorio and Walter Bianchi
BUENOS AIRES, Oct 3 (Reuters) - Argentina
has been forced to use money disbursed by
the International Monetary Fund (IMF) to pay
Moody's Says Government Debt off maturing debts, a Treasury spokesman
Burdens Constrain Fiscal Strength for told Reuters on Thursday, underscoring
Latin America efforts to avert a damaging default.
01-Oct-2019 The government has used $1.9 billion of the IMF
Oct 1 (Reuters) - Moody's: money to pay off debt on short-term dollar-
• Moody's says government debt denominated Treasury Bills (Letes) and local
burdens constrain fiscal strength for Latin currency Lecaps, along with debts with local
America lenders and regional development banks, the
• Moody's says most Latin American Treasury spokesman said.
sovereigns' fiscal profiles likely to experience The money was from a $7.2 billion tranche
a modest deterioration in 2020 received in June last year as part of the biggest
• Moody's says Brazil, Argentina, & Costa standby financing agreement ever agreed with
Rica will continue to report weakest fiscal the IMF. The tranche was intended to be
profiles with both high debt burdens and low "precautionary" and help shore up the reserves
debt affordability of Latin America's third-largest economy.
• Moody's says weaker fiscal profiles Argentina is grappling with a major debt crisis
reduce Latin American sovereigns' room to after a market crash in August hammered its
absorb shocks peso currency and sovereign bonds, however,
• Moody's says there are significant intra- forcing the government of President Mauricio
regional differences and general trend implies Macri to roll out plans to delay payments on
that Latin American sovereigns have less fiscal around $100 billion of debt.
space to absorb shocks "These resources are part of the loan agreed
• Moody's says Peru, Chile, Paraguay, with the IMF, they are Treasury deposits,
Mexico will have the strongest fiscal profiles intended for budgetary reinforcement, of a
precautionary nature," the Treasury spokesman
((Reuters.Briefs@thomsonreuters.com ;)) said, asking not be identified by name.
(c) Copyright Thomson Reuters 2019. Argentina struck a $50 billion deal with the IMF
in June last year, raised to $57 billion in
October. The IMF said then Argentina would no
longer treat the funds as precautionary, which
Argentina had originally been the intention.
Argentina is in talks with the fund over the
Fitch Says Argentina Crisis adds to release of a $5.4 billion portion of money. The
Neighboring Economies' Headwinds decision has been delayed amid the country's
economic turmoil and with presidential elections
01-Oct-2019
later this month.
Oct 1 (Reuters) - Fitch:
"While talks go on with the IMF related to the
• Fitch says Argentina crisis adds to
fifth review of the standby deal and the new
neighboring economies' headwinds
• Fitch says Argentina's economic crisis
disbursement, the government is making use of
will have negative effects on neighboring its resources to meet various budgetary and
economies, adding to challenging external financial commitments," the Treasury
backdrop for region spokesman said.
• Fitch says smaller economies like IMF support is key for Argentina, which is
Uruguay, Paraguay & Bolivia likely to see dealing with high inflation levels and a peso
currency that has lost around a third of its
greatest economic growth effects due to range
value this year.
of exposures from Argentina
The IMF said recently it remained fully engaged
• Fitch says while less vulnerable,
in its relationship with Argentina. The fund will
Argentina-related risks will still add to
meet for talks with Argentine officials, including
challenging macroeconomic backdrop for larger
Treasury Minister Hernan Lacunza, later this
neighbors like Brazil & Chile
month.
((reuters.briefs@thomsonreuters.com ;))
(c) Copyright Thomson Reuters 2019. (Reporting by Jorge Iorio and Walter Bianchi
Writing by Adam Jourdan; Editing by Tom Brown)
((adam.jourdan@thomsonreuters.com; +54
1155446882; Reuters Messaging:
adam.jourdan.thomsonreuters.com@reuters.net))

15
central bank figures showed on Monday,
driven by a combination of increased interest
"The dead don't pay" -Fernandez ally payments, higher borrowing and a weaker
tells IMF Argentina needs time to grow exchange rate.
04-Oct-2019 Brazil's total gross debt incorporating the central
By Rodrigo Campos government, states, municipalities and the social
Oct 4 (Reuters) - Argentina's Sergio Massa, a security system rose to 79.8% of gross domestic
key ally of presidential front-runner Alberto product from 79.0% the month before, the
Fernandez, said on Friday that the central bank said.
International Monetary Fund should give the That is the highest since comparable data
indebted country time to revive economic records began in 2006 and highlights the
growth to be able to pay off its debts. challenge the government faces in restoring the
Massa, a former Argentine chief of staff who public finances to health, which it says is a
struck an alliance with Peronist opposition leader prerequisite for reviving confidence, investment
Fernandez earlier this year, said the IMF should and growth.
see the relationship with Latin America's No. 3 According to the central bank, nominal interest
economy as a long-term journey. rates added 0.5 percentage points to debt/GDP
"The responsibility that the Fund has today is to ratio, the real's depreciation in the month
accompany Argentina in a 10-15 year project," accounted for 0.4 percentage points and net
Massa said at an event at the Wilson Center in debt issuance added 0.1 percentage point.
Washington. Stronger economic growth subtracted 0.3
He added that the IMF also had a responsibility percentage points.
to help countries like Argentina build up strong The real weakened 8% against the dollar in
economies, warning that if the country was not August, its biggest monthly fall in four years,
given that support, it may not be able to repay and benchmark 10-year Brazilian bond yields
its creditors. posted their biggest monthly increase since
"The dead don't pay... Argentina needs to grow August last year.
in order to pay," he said. Brazil's nominal budget deficit last month was
Argentina is facing a debt crunch after a sharp 63.64 billion reais ($15.3 billion), bringing the
market crash in August that pushed the accumulated deficit over the preceding 12
country toward default and forced President months to 444.7 billion reais, or 6.32% of
Mauricio Macri to roll out plans to delay GDP, the central bank said.
payments on around $100 billion of debt. The government's primary fiscal deficit before
That included funds from a record $57 billion interest rate payments are taken into account,
stand-by credit facility agreed with the IMF last was 13.45 billion reais ($3.2 billion), less than
year. the 16.69 billion reais deficit economists had
Massa, a centrist politician who has helped expected.
moderate Peronist Fernandez appeal to a For the 12 months to August, the primary deficit
broader voter base, is expected to play an totaled 95.508 billion reais, equivalent to 1.36%
important government role if Fernandez wins the GDP. The government's target for the calendar
general election later this month. year is a deficit of 132 billion reais, which would
Amid questions over the IMF's future in the be the sixth consecutive annual shortfall.
country, the Fund said late last month that it Last week, the Treasury said spending freezes
remained fully engaged in discussions with and cuts are putting the government on track to
Argentina and in helping the country get on a beat its fiscal targets for the year.
path to long-term growth and stability.
The Fund is expected to meet with an Argentine ($1 = 4.1650 reais)
delegation later this month in Washington to (Reporting by Marcela Ayres and Jamie McGeever;
review its program. Editing by Cynthia Osterman)
((jamie.mcgeever@thomsonreuters.com; +55 (0) 11
(Reporting by Rodrigo Campos; Editing by Adam 97189 3169; Reuters Messaging:
Jourdan and Dan Grebler) jamie.mcgeever.reuters.com@reuters.net))
((rodrigo.campos@reuters.com; @rodrigocampos; (c) Copyright Thomson Reuters 2019.
+1.646.223.6344; Reuters Messaging:
rodrigo.campos.thomsonreuters.com@reuters.net))
El Salvador
Fitch Says El Salvador Budget a Key

Brazil Test for Bukele's Political Capital
02-Oct-2019
Brazil's national debt rises to record
Oct 2 (Reuters) - Fitch:
high 79.8% of GDP • Fitch says El Salvador budget a key
30-Sep-2019 test for Bukele's political capital
By Jamie McGeever • Fitch says unchanged deficit target of
BRASILIA, Sept 30 (Reuters) - Brazil's national El Salvador's newly released 2020 budget
debt rose to the highest on record in August, proposal suggests limited appetite for fiscal

16
consolidation U.S. President Donald Trump calls Maduro's
• Fitch says a political stalemate leading to government illegitimate and recognizes
failure of budget proposal, approval for external Congress head and opposition leader Juan
financing could put pressure on El Salvador's Guaido as Venezuela's interim president.
rating Guaido's team is also pursuing plans to
renegotiate Venezuela's debt. He wants to
((Reuters.Briefs@thomsonreuters.com ;)) prevent creditors from taking Venezuela's
(c) Copyright Thomson Reuters 2019. main foreign asset, U.S. refiner Citgo, as
partial repayment for debt.
Creditors have had minimal contact with
Venezuelan officials because Maduro is not seen
Jamaica as a credible negotiator and U.S. sanctions
prevent many from taking part in such
S&P Says Jamaica Sovereign Credit meetings.
Rating Raised To 'B+' From 'B' On "Venezuela's public debt bonds were issued
Improved External Position under New York law, so any debt negotiation can
only be done by the Guaido government, whose
28-Sep-2019
legitimacy is recognized by the United States,"
Sept 27 (Reuters) - S&P Global Ratings:
tweeted Venezuelan economist Francisco
• S&P says Jamaica sovereign credit
rating raised to 'B+' from 'B' on improved
Rodriguez.
external position; outlook is stable "A renegotiation with Nicolas Maduro has no
• S&P says Jamaica has made material legal validity," added Rodriguez, who was the
progress in achieving macroeconomic stability economic adviser to an opposition candidate who
and strengthening of its external position ran against Maduro in last year's election.
• S&P says stable outlook reflects One U.S. bondholder told Reuters it would be
expectation that Jamaica will continue to bolster impossible for Maduro to negotiate given the
fiscal resilience through continued public-sector U.S. sanctions, its inability to issue new debt,
reform and the Guaido team's advances with creditors.
• S&P says stable outlook reflects Maduro's suggestion might have been intended
expectation, Jamaica will bolster fiscal resilience to try and encourage bondholders to pressure
through declining debt burden & generate the U.S. government to ease sanctions against
modest real GDP growth Venezuela, he surmised.
Asked if Maduro's renewed push for a
((Reuters.Briefs@thomsonreuters.com ;)) restructuring had any mileage, another investor
(c) Copyright Thomson Reuters 2019. replied: "No. Zero. Nothing."
(Additional reporting by Deisy Buitrago and Vivian

Sequera; Writing by Andrew Cawthorne; editing by
Venezuela Grant McCool)
((mayela.armas@thomsonreuters.com))
Venezuela's Maduro seeks to revive
stalled debt talks, bondholders
unimpressed
Putin, Maduro discussed Venezuela's
30-Sep-2019 debt to Russia last week
By Mayela Armas
CARACAS, Sept 30 (Reuters) - Venezuela wants 01-Oct-2019
to reopen contacts with foreign bondholders By Darya Korsunskaya
after a two-year hiatus to renegotiate some MOSCOW, Oct 1 (Reuters) - Russian President
$60 billion of foreign debt, President Nicolas Vladimir Putin and Nicolas Maduro briefly
Maduro said on Monday, but investors gave discussed Caracas' debt obligations to Russia
short shrift to the suggestion. last week during a visit to Moscow by the
Venezuela said in 2017 it wanted a Venezuelan leader, the Kremlin said on
restructuring, but the process quickly stalled Tuesday, without providing details.
amid a national political and economic crisis, and Close ally Moscow has acted as a lender of last
the imposition of U.S. financial sanctions. resort for Caracas, with the Russian government
At a news conference, Maduro gave instructions and oil giant Rosneft providing at least $17
to Vice Presidents Delcy Rodriguez and Tareck El billion in loans and credit lines since 2006.
Aissami - both of whom are on the U.S. In November 2017, Russia agreed to restructure
sanctions list - to contact creditors again. Venezuela's sovereign debt of $3.15 billion, with
"You two, call a debt renegotiation round with all repayments over 10 years. Under the deal,
the bondholders in the world, let's establish a Caracas is paying Moscow twice a year, with
timetable of immediate solutions," he said. repayments in small amounts during the first six
"I want to meet them here or anywhere in the years.
Russia's finance ministry spokeswoman said
world that we need to go, except the United
earlier on Tuesday that Venezuela had made
States, I don't want to go the United States any
its latest scheduled debt repayment to Russia.
more for now."
She did not disclose the amount.
17
Venezuela has paid the loan back in Russian of the African Development Bank and the Islamic
roubles, the Russian Finance Ministry's press Development Bank.
office said. A draft 2020 budget plan announced by Loukal
"Any debtor of Russia has the right to choose in on Tuesday envisages cutting the deficit to 7.2%
which currency to make the current urgent of gross domestic product next year from a
payment. Our strategic choice is to actively targeted 8% this year, partly by raising new
promote the rouble in international settlements," taxes.
the Finance Ministry said. Algeria approved a 1.5% spending cut for 2019
Russian Finance Minister Anton Siluanov said after a 25%rise last year.
in April that Venezuela was due to pay Russia However, spending on politically sensitive
$200 million this autumn, after more than subsidies will remain unchanged next year at
$100 million in interest was paid on schedule around 8.4% of gross domestic product, Loukal
at the end of March. was quoted saying by state news agency APS.
Rosneft said in August that Venezuelan state- Algeria subsidises almost everything from basic
owned oil company PDVSA had reduced its foodstuffs to housing and medicine.
outstanding debt to Rosneft to $1.1 billion by Protests sporadically erupt to demand better
the end of the second quarter, down from $1.8 services in sectors such as water and roads, as
billion at the end of the first quarter. well as sufficient subsidised housing units.
Venezuelan opposition leader Juan Guaido, who A large part of Algeria's energy earnings is used
invoked the constitution to assume the interim to pay for imports of food and other goods due
presidency earlier this year alleging Maduro to poor domestic production after the
rigged a 2018 election, scoffed at his visit to government failed to diversify its economy away
Moscow. from oil and gas.
"While we are seeking humanitarian aid, Maduro In a bid to reverse the trend, Algeria is planning
was carrying out political tourism and paying to scrap a rule limiting foreign ownership in
debt," Guaido, who is also head of Venezuela's projects involving non-strategic sectors.
opposition-run Congress, told reporters, "In order to improve the business climate and
referring to the deep national economic crisis. the attractiveness of our economy, we decided
to lift constraints expressed in the 51/49% rule,"
(Reporting by Tom Balmforth, Katya Golubkova, Darya
Loukal said.
Korsunskaya and Andrey Kuzmin
Additional reporting by Mayela Armas in Caracas
The government will also increase taxes on
Editing by Giles Elgoo, Peter Graff and Mark Potter) tobacco products and impose for the first time
((Tom.Balmforth@thomsonreuters.com ;)) an "environment tax" on motorists which will be
(c) Copyright Thomson Reuters 2019. included in car insurance contract cost, Loukal
said.
The economy is expected to grow by 1.8% in
2020, down from a 2.6% forecast for this year,
AFRICA amid a political crisis caused by mass protests
demanding a change in the political system,
creating uncertainties for both national and
Algeria foreign investors.
Algeria to slash spending, seek foreign (Reporting by Hamid Ould Ahmed in Algiers
debt Editing by Ed Osmond and Matthew Lewis)
((angus.mcdowall@thomsonreuters.com; Reuters
01-Oct-2019
Messaging:
By Hamid Ould Ahmed angus.mcdowall.thomsonreuters.com@reuters.net))
ALGIERS, Oct 1 (Reuters) - Algeria plans to (c) Copyright Thomson Reuters 2019.
seek foreign loans in 2020 for the first time in
years and cut public spending by 9.2%, the
finance minister said on Tuesday, as it
grapples with years of low revenue from Egypt
energy sales.
The OPEC member's foreign debt is currently
Egypt plans to double average debt
estimated at less than $1 billion, but lower
energy prices since mid-2014 have bitten deep
maturity this year
into its foreign currency reserves as it struggled 04-Oct-2019
to reduce its lavish social spending. CPI FINANCIAL
Painful fiscal decisions have been further The finance ministry has embarked on a four-
complicated by a year of political tumult, with year strategy that aims to reduce the debt
mass protests demanding a complete burden in one of the Middle East's most
overhaul of the ruling elite and an end to indebted countries to 80 per cent of gross
corruption that forced President Abdelaziz domestic product by 2022.
Bouteflika from power in April. Egypt's finance ministry said that the
The government will turn to foreign financial government plans to raise its share of longer-
institutions of which it is a member to fund dated debt to 40 per cent of annual domestic
strategic development projects, Finance Minister issuance by the end of the current fiscal year,
Mohamed Loukal told state radio. It is a member from five per cent in 2017-18, reported
18
Bloomberg. compounded by Ethiopia's ethnic fault-lines &
Mohamed Maait, the Egyptian Finance Minister, disputes over land
said that with a gradual shift away from short-
term T-bills and toward instruments such as ((Reuters.Briefs@thomsonreuters.com ;))
treasury bonds, the goal is to push the average (c) Copyright Thomson Reuters 2019.
maturity on the debt to around four years by
June 2020, up from 1.9 years in 2017-2018.
The strategy involves diversifying debt
instruments, currencies and investor bases Morocco
and could see the introduction of new
instruments such as variable-rate bonds S&P says Morocco outlook revised to
linked to inflation and zero-coupon securities. stable from negative on budgetary
"You need some sort of diversification, this is the consolidation efforts; 'BBB-/A-3'
main concept we are adopting," said Maait. ratings affirmed
Maait said that the first international issuance
this year is likely to be in US dollars, Sukuk, as 04-Oct-2019
well as green bonds, Panda bonds in Chinese Oct 4 (Reuters) -
renminbi and Samurai sales in Japanese yen. • S&P says morocco outlook revised to
stable from negative on budgetary
Investor interest in Egyptian local debt could be
consolidation efforts; 'BBB-/A-3' ratings
boosted by a future agreement with Belgium-
affirmed
based Euroclear—which settles transactions in
• S&P says believe precautionary &
securities in dozens of countries—as well as liquidity line approved by international
meeting the technical specifications to include monetary fund in December 2018 underpins
Egyptian debt in JPMorgan's Emerging-Market Morocco's macro financial stability
Bond Indexes (EMBI), said Maait. • S&P says outlook revision reflects S&P's
The finance ministry hopes to conclude a expectation that Morocco's budgetary position
Euroclear deal by January 2020 and meet should gradually improve to reach 3% of GDP in
requirements for EMBI by July of the same year. 2022
Egyptian debt has been attracting foreign • S&P says Morocco's economic growth
investors with one of the world's highest real remains vulnerable to volatility in agricultural
yields—meaning the rate investors earn when output, ongoing economic slowdown in Europe
stripping out inflation—at about 5.7 per cent • S&P says given morocco government's
currently. commitment to privatize some assets from
2019-2024, S&P expects change in net general
Copyright (c) 2019 Sourced by MIST all rights
government debt to decline as of 2019
reserved
©Thomson Reuters 2019. All rights reserved.
Ethiopia
Nigeria
Fitch Revises Ethiopia's Outlook to
Negative from Stable; Affirms At 'B' Nigerian lawmakers increase 2020
01-Oct-2019 budget outline based on higher oil
Oct 1 (Reuters) - Fitch: price
• Fitch revises Ethiopia's outlook to
negative; affirms at 'B'
03-Oct-2019
• Fitch says it revises Ethiopia's outlook ABUJA, Oct 3 (Reuters) - Nigeria's legislature
to negative from stable on Thursday increased the value of the
country's 2020 budget outline to 10.729
• Fitch says revision of Ethiopia's outlook
trillion naira ($35 billion) based on
to negative reflects prospects for continued
expectations of higher oil prices.
political instability, potential for meaningful
The legislature passed a medium-term
economic spillovers
expenditure framework that increased the
• Fitch says political unrest, may weigh
anticipated oil price to $57 per barrel from a
further on tax collection and foreign direct
previous $55 per barrel. That pushed the budget
investment in Ethiopia
up from 10.002 trillion naira.
• Fitch says Ethiopia's rating balances
The finance minister had previously revised the
strong economic growth against low
expected oil price down from $60 per barrel to
development, governance indicators, high debt,
cushion against supply shocks.
low foreign currency reserves
The framework passed on Thursday also pegged
• Fitch says Ethiopia's 'B' rating reflects
oil production at 2.18 million barrels per day
international support to ease financing pressures
(bpd). While Nigeria is currently producing at
• Fitch says Ethiopia's external finances
roughly that level, it had pledged to cut it meet
remain a key weakness for rating
an OPEC cap on crude oil of 1.685 million bpd.
• Fitch says challenge of enacting political
The document is a plan Nigeria uses to prepare
transition after decades of tight state control is
19
its annual budget. The finance minister submits plan, raising fears that it may not materialise.
the framework to the legislature, which must Moody's, the last of the top three ratings firms
then approve it. to still rank Pretoria's debt at investment
President Muhammadu Buhari is expected to grade, said in September it was unlikely to cut
present a finalised budget proposal to the the rating to junk anytime soon, but that the
legislature on Tuesday. delay over reforming Eskom was a major risk.
Investors, however, seem to expect a
($1 = 306.0000 naira) downgrade soon.
(Reporting By Camillus Eboh, writing by Libby George; An S&P Capital IQ model, based on credit default
editing by David Evans) swap prices, shows that markets have begun to
((Libby.George@thomsonreuters.com; +234 809 065 price in a downgrade. Since September, the cost
5059; Reuters Messaging: of five-year swaps rose 20 basis points to 200
libby.george@thomsonreuters.com)) bps on Wednesday, a two-month high, according
to data from IHS Markit.
(Reporting by Mfuneko Toyana in Johannesburg;

additonal reporting by Marc Jones in London; editing
South Africa by Larry King)
((mfuneko.toyana@thomsonreuters.com;
South Africa debt-to-GDP could reach +27117753153; Reuters Messaging:
95% by 2024, IIF says mfuneko.toyana.thomsonreuters.com@reuters.net))
03-Oct-2019
JOHANNESBURG, Oct 3 (Reuters) - South
Africa's public debt could rise as high as 95%
of gross domestic product by 2024 if the Tunisia
government doesn't restructure the state-run
utility Eskom and implement a workable
growth plan, the Institute of International
Tunisia's budget will rise in 2020 to
Finance said in report. $16.4 billion
The report, released late on Wednesday, echoes 30-Sep-2019
a warning on Tuesday by the central bank about TUNIS, Sept 30 (Reuters) - Tunisia's state
government debt, which has doubled from less budget will rise from 40 billion dinars in 2019
than 30% of GDP before the 2008 global to 47 billion dinars in 2020 ($16.4 billion),
financial crisis to nearly 60%. Finance Minister Ridha Chalgoum said on
The 95% estimate is the worst of four outlooks Monday, according to the state news agency
the IIF report laid out. But even its baseline case TAP.
shows debt rising to 70 percent of GDP, The budget targets a deficit in 2020 of 3% of
according to the IIF, a trade group of financial gross domestic product, compared with the
institutions that tracks market conditions 3.9% that Prime Minister Youssef Chahed has
worldwide. said is expected this year, and the 7.4%
"South Africa’s debt sustainability is recorded three years ago.
increasingly in question," the IIF said in its The North African country’s economy has been
report. in crisis since the toppling of autocrat Zine al-
The South African economy expanded 0.8% in Abidine Ben Ali in 2011 threw it into turmoil,
2018, and in February the National Treasury said with unemployment and inflation shooting up.
it expected 1.5% growth in 2019. But it has Chahed has said inflation will drop to about 5%
since warned it might have to lower that next year from a high of 7.8% last year.
forecast, especially after it granted Eskom a 59 Tunisia's weak economy is a big theme in
billion-rand, two-year bailout package. elections set for this month and next. Tourism,
The IIF said a proposed plan to shift Eskom's an important source of foreign currency, has
debt to the government would add 6 begun to recover four years after two militant
percentage points to South Africa's sovereign attacks that killed scored of foreigners.
debt.
"The key for an improvement of the situation is (Reporting by Tarek Amara, editing by Larry King)
the implementation of the national growth plan ((tarek.amara@thomsonreuters.com ;))
and Eskom restructuring blueprint," it said. (c) Copyright Thomson Reuters 2019.
"Investors and rating agencies will follow the
October and February budget announcements
closely." OCEANIA
Finance Minister Tito Mboweni is set to deliver
his medium- term budget on Oct. 30. He is
expected to give details of President Cyril
Ramaphosa's plan to split Eskom into three Solomon Islands
units, generation, transmission and distribution.
Labour unions that backed Ramaphosa's Moody's Says Affirms Solomon Islands'
presidential campaign, as well as factions inside B3 Rating Maintains Stable Outlook
the ruling African National Congress, oppose the 03-Oct-2019
20
Oct 2 (Reuters) - Moody's: economy - external trade accounts for a
• Moody's says affirms Solomon Islands' relatively small share of GDP - continues to see
B3 rating; maintains stable outlook robust consumer spending, a tight labour market
• Moody's says expects Solomon Islands' and expansionary fiscal policy and we envisage a
Government's debt burden to increase over the slowdown rather than a recession ahead.
next few years The U-turn in global monetary policy direction
was completed in 3Q19 with two interest rate
((Reuters.Briefs@thomsonreuters.com ;)) cuts from the Fed, one interest rate cut from the
(c) Copyright Thomson Reuters 2019. ECB and the ECB announcement of a restart of
Quantitative Easing (QE) asset purchases on an
open-ended basis.
GLOBAL "Global central banks have delivered the most
rapid and geographically broad-based shift to
monetary policy easing since 2009," according
Fitch Ratings: World GDP Growth to Hit to Coulton.
an Eight-Year Low in 2020 Nevertheless, we do not envisage recent mid-
cycle 'insurance' based rate cuts from the Fed to
30-Sep-2019
mark the beginning of a protracted series of rate
Fitch Ratings-London-September 30: The
cuts and we expect the Fed to remain on hold
outlook for the global economy has
through 2020. There are also doubts as to how
deteriorated significantly due to the
escalation in the US-China trade war, Fitch effective monetary easing can be in an
Ratings says in its new Global Economic environment of sharply rising trade policy
Outlook (GEO). We now forecast world growth uncertainty and its deleterious impact on
next year to fall to the lowest rate since 2012. business investment.
"There can be few precedents since the 1930s of The financial market implications of the
global growth prospects being affected so monetary policy turnaround have been
significantly by trade policy disruptions," said pronounced though, as evidenced by the sharp
Fitch Chief Economist Brian Coulton. decline in global bond yields. The impending
Fitch's world GDP growth forecasts for both 2019 return of sizeable global QE asset purchases in
and 2020 have been lowered by 0.2pp since the 2020 has been an important contributing factor.
June GEO in response to the sharp escalation in
the US-China trade war over the summer. Global Media Relations: Peter Fitzpatrick, London, Tel: +44
20 3530 1103, Email:
growth is projected to fall to 2.6% this year and
peter.fitzpatrick@thefitchgroup.com.
to 2.5% next year from 3.2% in 2018. This Additional information is available on
would be the slowest pace of expansion since www.fitchratings.com
2012 when the Eurozone crisis was at its peak. Copyright © 2019 by Fitch Ratings, Inc.
The current global slowdown is highly ©Thomson Reuters 2019. All rights reserved.
synchronised with 19 out of the 20 countries
covered in the GEO expected to record lower
growth in 2019 than last year. Our growth
forecasts for 2020 have been revised down for EMERGING MARKETS
no less than 16 countries since June.
China's 2020 growth forecast has been revised
down to 5.7% from 6.0% and the Eurozone Emerging markets suck in $37.7 bln
forecast has been cut to 1.1% from 1.3% in portfolio flows in snapback September
June. The US 2020 forecast has also been 01-Oct-2019
lowered by 0.1pp to 1.7%. LONDON, Oct 1 (Reuters) - Emerging market
New US tariff measures announced in August bonds and stocks pulled in $37.7 billion of
will result in the effective tariff rate on Chinese non-resident portfolio flows in September
imports rising to nearly 25% by the end of this after suffering hefty losses in August amid
year. The new measures represent a shock that rising trade tensions, the Institute of
is three-quarters of the size of our previous International Finance (IIF) said on Tuesday.
'worse-case' downside scenario for the trade Fund managers put $27.6 billion to work in
war. China will ease domestic macro policies to a developing markets debt while emerging equities
degree in response to decelerating growth but attracted $10.3 billion, the IIF said, adding
we do not envisage an aggressive credit Chinese stocks raked in $9.0 billion in
stimulus, as policy makers continue to balance September - a substantial improvement from
growth and financial stability considerations. just $1.6 billion in August.
Lower growth in China will prolong the slump in "This recovery in non-resident portfolio flows
global trade and manufacturing, which will, in highlights the pendular nature of flows during
turn, continue to pressure the Eurozone 2019," IIF economist Jonathan Fortun wrote in a
expansion. Germany has been particularly note, adding potential triggers for further risk-off
affected due to its highly open economy and we episodes were proliferating, including
anticipate a technical recession in 3Q19. intensifying trade tensions.
The US is not immune, with exports, "The outlook for equity flows to non-China EM
manufacturing and business investment remains difficult given the large amount of hot
deteriorating. However, its more 'closed' money that has already gone to EM in recent
21
years, which we see as having resulted in a
positioning overhang, a structural drag on new
inflows."
(Reporting by Karin Strohecker; Editing by Emelia

Sithole-Matarise)
(( karin.strohecker@thomsonreuters.com ;
+442075427262; Reuters Messaging:
karin.strohecker.reuters.com@reuters.net ))

22

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Emerging Sovereign Debt Markets NEWS

Number 40 Week 28 September – 4 October 2019

ASIA ...................................................................2 Sri Lanka's interim budget aims for 2.2%

Brazil ...........................................................16 South Africa debt-to-GDP could reach

El Salvador ..................................................16 Tunisia's budget will rise in 2020 to $16.4

Jamaica .......................................................17 Solomon Islands .......................................... 20

provided as a service to Subscribers. is considered to be a reliable source. However, the Secretariat

relations to normalise in the foreseeable future,

($1 = 14,205.0000 rupiah)

PDM Network Weekly Newsletter on Emerging Markets

Foreign holdings of Czech domestic ((Reuters.Briefs@thomsonreuters.com ;))

($1 = 4.3473 lei)

PDM Network Weekly Newsletter on Emerging Markets

Argentina dips into IMF funds to pay

PDM Network Weekly Newsletter on Emerging Markets

Fitch Says El Salvador Budget a Key

PDM Network Weekly Newsletter on Emerging Markets

(Additional reporting by Deisy Buitrago and Vivian

(Reporting by Mfuneko Toyana in Johannesburg;

(Reporting by Karin Strohecker; Editing by Emelia

PDM Network Weekly Newsletter on Emerging Markets

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